WSJ What’s News: “Fed Signals a Key Policy U-Turn”

Date: August 22, 2025
Host: Azhar Sukri
Featured Guests: Quentin Webb (WSJ Deputy Finance Editor), Veronica Dagger, Joe Pinsker (WSJ Personal Finance Reporters)
Main Themes: The Federal Reserve’s signaling of a major policy shift, US policy on chipmakers, and the hidden costs of parenting with practical tips.

Episode Overview

Today’s episode centers on the Federal Reserve’s anticipated announcement of a significant policy U-turn at the Jackson Hole Symposium, the debate within the Fed regarding interest rate cuts, and the White House’s evolving approach to the CHIP Act and domestic chipmakers. In addition, the show continues its "Price of Parenting" series, revealing surprising costs for new parents and creative money-saving strategies.

Key Discussion Points and Insights

1. Federal Reserve’s Policy U-Turn at Jackson Hole

[00:53 - 03:51]

• Background: Fed Chair Jerome Powell is set to use the high-profile Jackson Hole address to explain a reversal of some innovations from the 2020 framework, particularly those regarding employment and inflation targeting.
• Policy Evolution (Quentin Webb):
  • In 2020, during the pandemic, the Fed allowed itself flexibility to let inflation run slightly above target if it had previously undershot—meant for a low-inflation era.
  • The macroeconomic reality has shifted: “We’re in a very different macroeconomic environment... that no longer seems to be the problem that we’re facing.” – Quentin Webb [01:58]
  • Debate existed over whether price rises were truly “transitory.”
  • The previous focus on only worrying when unemployment is too high (and less so if the job market was “very tight”)—that “asymmetry may not survive the new version of the framework.” – Quentin Webb [02:46]
• Response to Criticism: The U-turn partly responds to critics who believe the Fed’s 2020 loosened stance contributed to the highest inflation in four decades.
• Outlook for Interest Rates:
  • The current question is whether Powell will hint at a rate cut as soon as September: “To what extent will Fed Chair Jerome Powell signal that a rate cut is coming as soon as the next meeting... Or... remain data dependent and the data hasn’t yet given confidence that the labor market is weak enough?” – Quentin Webb [03:26]

Notable Quote:

• “There was a live debate at the time about the extent to which price rises were transitory rather than something that would feed into sustained inflation.” – Quentin Webb [02:23]

2. Diverging Views Among Fed Officials

[03:52 - 05:51]

• Labour Market Assessment:
  • Cleveland Fed President Beth Hammock: The labor market is “reasonably good and does not support a reduction [in rates],” but inflation appears to be worsening.
  • Boston Fed President Susan Collins: Shares inflation concerns but is “open” to a rate cut soon, citing risks from weaker employment and tariffs impacting purchasing power.
• Takeaway: Split signals within the Fed highlight internal uncertainty about the timing and justification for lowering rates.

3. US Government Pursuing Equity in Chipmakers

[03:52 - 05:51]

• Policy Shift: The Trump administration is considering taking equity stakes in some companies receiving subsidies from the 2022 Chips Act if those firms aren’t boosting US investment.
• Nuance: Companies like TSMC increasing US investments are spared; others may face equity requirements.
• Recent Negotiations: Administration in talks to take a 10% stake in Intel, confirmed by Commerce Secretary Howard Lutnick.
• Implication: Signals a move toward using subsidies as leverage for strategic tech interests.

4. The Hidden (and Surprising) Costs of Parenting

[06:30 - 12:39]

“Price of Parenting” Series Segment

• Rising Costs:
  • Interviewed parents universally found parenting more expensive than expected.
  • Monthly spending examples: One family’s jump from $3,000 to $4,000, another from $5,000 to $8,000.
  • Unexpected impulse purchases: “Ordering something completely out of desperation online at 3 in the morning.” – Joe Pinsker [07:39]
• Indirect and Unexpected Costs:
  • Infrastructure changes (new car, wardrobe) that aren’t diapers or formula but are “certainly kid related.” – Joe Pinsker [08:45]
  • “When you have a problem with a baby, there’s always something you can buy to try to solve it, whether it’ll actually solve your problem or not.” – Joe Pinsker [07:46]
  • Surprised by niche products such as blackout sleep tents ($200) and smart temperature sensors ($90).

Money-Saving Tips for Parents

• Babysitting Swaps:
  • High babysitting costs ($25/hr in D.C.). Swap sitting duties with another couple to avoid outlay for date nights.
    • “One couple puts their kids to bed... then one parent from the other couple comes over to babysit while the parents head out for a date night. And then on another night, they swap roles.” – Veronica Dagger [09:22]
• Avoid Buying New Gear:
  • Use Buy Nothing groups, consignment, gear swaps for gently used sporting equipment (bikes, skis, etc.).
    • “Teach your kids that not everything needs to be brand new and you don’t have to pay top dollar for everything.” – Veronica Dagger [11:09]
• Steering Clear of ‘Must-Haves’:
  • Some parenting books caution against luxury items (e.g., fancy leather changing bags, Moses baskets).
• Budgeting With Kids:
  • Use character stickers on generic items to avoid impulse buys at the grocery store.
    • “So these kids are happy to get something similar to what they wanted. It’s a win and it saves the parents money.” – Veronica Dagger [12:21]
  • Teaches children about trade-offs and smart purchases.

Notable Quotes & Memorable Moments

• “The Fed is obliged every five years to conduct a review of its framework... It is rethinking whether the innovations that it put in place in 2020... are fit for purpose now.” – Quentin Webb [01:59]
• “There are these ways that having a kid makes you change, almost like the basic infrastructure of your life, and buy things that aren’t exactly diapers, but they’re certainly kid related.” – Joe Pinsker [08:45]
• “So there’s ways to get what you want in a cheaper way.” – Veronica Dagger [12:28]

Important Timestamps

• [00:53] – Episode intro: Jackson Hole anticipation & Fed policy review
• [01:57] – Quentin Webb on why the Fed is shifting course
• [03:26] – The outlook for interest rates and upcoming Jackson Hole comments
• [03:52] – Competing Fed officials’ assessments of the labor market
• [04:36] – Trump administration considers equity stakes in chipmakers
• [06:30] – “Price of Parenting” segment begins
• [07:15] – Joe Pinsker: Parents shocked by unexpected expenses
• [09:15] – Veronica Dagger’s tips: Babysitting swaps
• [10:29] – Saving on kids’ gear—consignment and swaps
• [11:29] – Teaching kids about budgeting and trade-offs

Tone and Language

• The episode maintains a brisk, fact-driven, and accessible tone, combining Wall Street Journal reporting authority with relatable anecdotes, especially around the family finance segment. Quotes and explanations are provided clearly, with an emphasis on actionable insights.

This summary gives listeners a full, structured briefing on the Federal Reserve’s pivotal policy reconsideration, current debates in US economic and tech policy, and down-to-earth advice for family budgeting—capturing both the urgency of financial news and the everyday impact on listeners’ lives.